NFI funds e-Katalyst project
E-Katalyst joined the ranks of Poland's small but growing collection of internet incubators last week after receiving an initial zl. 6 million ($1.4 million) from Jupiter National Investment Fund (NFI). Jupiter NFI will own 50.1% of the company while e-Katalyst's managers and advisers will control a 49.9% stake. Jupiter will invest an additional zl. 24 million ($5.6 million) in e-Katalyst during the first half of 2001.
The incubator plans to invest in four projects in 2000 and eight to 10 companies in 2001 and is aiming for a public offering of shares on the Warsaw Stock Exchange in 2002. E-Katalyst will invest on average zl. 1 million-zl. 1.5 million ($233 million-$349 million) in each project during the first four to eight months of development. It will focus on selecting and investing in projects that will supply internet-related services rather than ones that provide technical infrastructure or aim their services at consumers, said James Van Bergh, the president of e-Katalyst. The firm will supply start-ups with administrative support, software design and development, strategic planning, and capital raising.
Jupiter NFI's stake in e-Katalyst is an effect of a shift in strategy as the fund has increasingly looked to investing in information technology start-ups that have huge growth potential, said Janusz Koczyk, vice president of Jupiter NFI. Jupiter NFI, which was created from a merger of the III NFI and XI NFI, last fall announced a new strategy which included investing in IT-related companies.
Poland's national investment funds, which were created by the government in the mid-1990s to privatize and finance the restructuring of state-owned companies, have been criticized for lack of investor interest and poor financial performance. Although Jupiter NFI has been interested in investing in internet-related ventures, so far most ventures have been small firms whose strategies were incompatible with the fund's own investment goals, Koczyk said.
Van Bergh said he anticipates the same explosive growth of internet incubators in Poland that has occurred in the United States and Western Europe in recent years. He pointed out that e-Katalyst is the third genuine full-service incubator in Poland, joining Internet Investment Fund (IIF) and e-farm.
Rafal Styczen, president and co-founder of IIF, the first full-service internet incubator in Poland that started operating earlier this year, said it was difficult to evaluate e-Katalyst's strategy since the firm did not disclose details about the specific internet-related start-ups it would invest in. He said that although more incubators are setting up shop in Poland, eventually only two or three big ones would provide a full range of services and support for internet hatchlings.
As for e-Katalyst's general plans, Styczen said that the firm was on track with planning to nurture four fledgling internet projects this year and investing zl. 1.5 million in each for an average six-month period. "During our first year of operation, we have had to give a lot of support to (start-ups) ... not just to supervise them, but to control them all the time and push them forward," he said.
Magdalena Wierzchowska contributed to this article.
